WILMINGTON, Del. (CN) – A Tribune creditor withdrew its bankruptcy plan from contention in the 2-year-old Chapter 11 case, leaving three reorganization plans for the troubled media company.
The decision by the senior creditors, dubbed SoCal for step-one credit agreement lenders, to pull its reorganization plan was “part of its own internal decision to withdraw,” a SoCal lawyer told Judge Kevin Carey at a hearing on Wednesday in Delaware bankruptcy court.
Step-one lenders, comprising of 14 hedge funds, are owed around $767 million by Tribune from the first part of a two-step buyout of the company orchestrated by Sam Zell and financed by JPMorgan and other banks.
Chicago-based Tribune filed for bankruptcy one year after the 2007 leveraged buyout of the company that left it $13 billion in debt.
Creditors may vote on the three remaining reorganization plans after revisions are made to reflect withdrawal of the SoCal plan. The number of plans in this bankruptcy case is unusual as there is normally just one plan for creditors to choose.
Tribune, which is joined by JPMorgan, Angelo Gordon & Co., Oaktree Capital Management and the committee of unsecured creditors, has one of the remaining reorganization plans in contention. That group is at odds with Aurelius Capital Management, another plan leader, on how the step-one and step-two lenders’ debts are treated.
On Wednesday, representatives of Oaktree and Angelo Gordon appealed to have Aurelius’ law firm, Akin Gump Strauss Hauer & Feld, disqualified over an alleged conflict of interest.
Akin Gump was Angelo Gordon’s in-house counsel for several years, and representatives for the hedge funds say the firm may have some “confidential information” about the company.
Carey appeared reluctant at the hearing on Wednesday to approve change of counsel for Aurelius at this stage in such a “complex Chapter 11 case.” Carey asked the warring parties to resolve their issues outside the courtroom so that Aurelius could keep Akin Gump as its counsel.